Brexit: Environmental Enforcement Agency
Baroness Hayter of Kentish Town Excerpts(6 years, 10 months ago)
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Lord Gardiner of Kimble
My Lords, we will continue to implement EU legislation that is on the statute book. The whole purpose is to have certainty on the statute book. What we want with this new environmental body is to ensure that there is not a governance gap and that in our wish to enhance the environment, government and, potentially, other public bodies can be held to account. We think that that is very important indeed.
Baroness Hayter of Kentish Town (Lab)
My Lords, will the Minister tell us what discussions are taking place with the devolved Administrations, such that the new body can be co-designed and owned by all four Governments, given the importance of these areas to devolved responsibilities?
Lord Gardiner of Kimble
My Lords, we are already working with devolved Administrations on which powers coming back from the EU should be devolved further. We want to explore whether Scotland, Wales and Northern Ireland wish to take a different or a similar approach on this matter. If they wish to join what will be an English body, we would be pleased. On the other hand, they may decide to take a somewhat different approach. Our thrust in this is to collaborate so that if they wish to be part of this body, we would welcome that.
Deregulation Bill
Baroness Hayter of Kentish Town Excerpts(9 years, 9 months ago)
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Baroness Hayter of Kentish Town (Lab)
My Lords, the Government’s new partial authorisation for insolvency practitioners would split the existing regulation of this quite tiny profession—some 1,350 who take appointments, according to the noble and learned Lord the Minister—into three. There would be company-only and individual-only insolvency practitioners, and some of course doing both. On the basis of no evidence, the Government have decided to dilute this very small but specialist profession. Amendment 6 would preclude the development of corporate-only licences.
The Government admitted to the insolvency practitioners’ professional body, R3, that Clause 17 was not being introduced to “fix a problem”. Indeed, the Government cited no evidence of undercapacity in the market, nor of complaints about the current system. Virtually all the insolvency practitioners consulted, and their major representatives, said that the proposal was a bad idea. The ICAEW’s consultation evidenced no support for the partial qualification. Indeed, the only body cited as being in support, the IPA, found that 61% of its respondents were against—they did not think that the proposals were a good idea.
According to the Government, it was only some of the IPA’s non-practitioner members who were in favour. More than that, having finally seen the IPA’s survey last week, I discovered that its questionnaire did not distinguish between individual insolvency-only licences, which we support, and corporate-only licences, about which we have grave reservations. So the IPA has no idea whether any of its respondents support the idea of practitioners undertaking corporate insolvencies without also being qualified in individual insolvency. Furthermore, despite finding that a majority of its respondents did not think it was a good idea, the IPA dismissed these views as being those only “of current licence holders”. Surely those are exactly the people who know what they are talking about.
Without Amendment 6, Clause 17 would allow insolvency practitioners to undertake corporate bankruptcies, which almost always also affect the financial status of individuals, with no qualification as to the latter’s needs. Indeed, insolvency practitioners often do not know at the outset of a case, particularly with micro-businesses, whether they are dealing with a corporate or personal insolvency—or, indeed, with both, given the involvement of personal guarantees and the nature of creditors.
It is strange that this Deregulation Bill will create three types of licence—rather than the current one—with new exams, oversight and monitoring. The assertion has been made, but with no evidence, that it will attract new entrants; the assertion has been made by the Government that IP fees will be reduced, without any evidence; and the assertion has been made that training costs will be reduced. Again, no evidence was supplied. This whole shake-up is on the basis, by the Government’s own estimates, that there will be only about 100 partial licences.
Furthermore, it is likely to be the large insolvency firms that train corporate-only practitioners at the expense of smaller insolvency firms, of which two-thirds do both corporate and personal insolvencies. More than 80% of smaller firms do not believe that they would get much benefit from lower training costs. Indeed, 90% said that they would not train a partial licence holder. Smaller firms are least likely to specialise and are therefore least likely to benefit from the change. So there is no help to smaller firms—just when the Small Business, Enterprise and Employment Bill is aimed at trying to help small firms.
Why have the Government dreamt up this clause? There is no evidence of a waiting group of would-be IPs dying to enter the market if only they could train simply in corporate insolvencies. Indeed, a number of firms have been reducing their workforce. The Insolvency Lawyers’ Association questioned the logistics of operating a two-tier mixed system, while R3 has serious concerns about the change. It considers that partial licences will have a negative impact on businesses and individuals seeking financial advice, and on the quality and competitiveness of the UK’s insolvency regime, which is currently rated one of the world’s best by the World Bank. Meanwhile the Institute of Chartered Accountants of England and Wales, the largest authorised body regulating insolvency practitioners—regulating, I think, about half the profession—opposes this partial insolvency licence system. It set out its reasoning to the Government a year ago. The Government, however, ignored that, despite the reputation and expertise of the ICAEW. The institute sees no need for partial licensing; it is unaware of any demand for it; and it does not consider that regulatory costs would be lower.
The ICAEW is also concerned that an insolvency practitioner with partial authorisation would not acquire the broad range of knowledge and expertise necessary to provide appropriate advice in a corporate insolvency. We also fear that the proposal would lower standards, given that Jenny Willott MP, the Minister in the Commons, said that the partial licence would,
“reduce a little the high bar on entry to the profession”.
As the ICAEW retorted:
“Reducing the breadth of knowledge required of IPs could be regarded as a lowering of standards”.
We are talking about people’s futures: whether jobs are to be saved or a company liquidated; whether individuals will be made bankrupt; whether creditors will get their money back; whether a company will be sold to someone who can retain at least some of the business.
The Institute of Chartered Accountants of England and Wales, which operates under a royal charter, works in the public interest. Given the potential impact on standards of practice that partial authorisation might have, it does not believe that the proposed reform would be beneficial to the public. The proposal to allow corporate bankruptcies to be handled by people who are unqualified in personal insolvency is misguided, unnecessary, criticised by the profession and other stakeholders and based on unsubstantiated claims. Apart from that, it seems a very good idea.
I urge the Government—even at this late stage—to think again, to listen to R3, the ICAEW and other specialists, and to accept Amendment 6. I beg to move.
The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)
My Lords, I am grateful to the noble Baroness for tabling this amendment. We have debated this matter in Committee and I met her and representatives of R3 a few weeks ago to discuss it. The amendment seeks to limit partial authorisation to personal insolvency. This debate allows the Government to set out why we believe that allowing specialised authorisation for insolvency practitioners for both personal and corporate insolvency is the right thing to do.
I recognise that this is a matter of considerable interest to those in the insolvency profession. However, there is a wider impact. The purpose of generally requiring insolvency practitioners to have certain qualifications and experience is that they are given significant powers by statute and it is important that there is confidence that they will use such powers appropriately. It is not to protect insolvency practitioners as a profession as such. It is important, therefore, that the barriers this places on entry—there is quite properly a barrier because of the statutory responsibilities and powers—are no higher than needed for the purpose. I think this was the context in which my right honourable friend Jenny Willott was speaking. The noble Baroness has not provided any evidence whatever that having separate authorisations for personal and corporate insolvency would in any way lower the standards in each of these disciplines.
Most insolvency practitioners are already qualified, usually as accountants, sometimes as lawyers. What we are discussing is what specific training and qualifications they need in order to act as insolvency practitioners. The amendment would allow specialised authorisation in personal insolvency but not corporate, so I will focus on why we believe that it would be helpful to allow specialised authorisation for corporate insolvency.
Opponents have said—as the noble Baroness herself did in moving her amendment—that there is no evidence of the need for change. However, there have been reports on the insolvency profession that have raised concerns about the level of competition in this profession. Two independent reports have noted failings in the current regime that result in fees being higher than they should be. We believe that partial authorisation will increase competition and place downward pressure on fees, which in turn could benefit creditors in the form of higher dividends.
Baroness Hayter of Kentish Town
I thank the noble and learned Lord for that response and for the meeting with representatives of R3. I do not mind the Government not listening to me, but they do not listen to R3, to the Institute of Chartered Accountants in England and Wales, or to all those who are practising in this area. I will say only two things.
The first is a point on fees and the idea that this is simply a matter of bringing more people in. I hae ma doots about that; it is about the big ones charging high fees. Indeed, in the Small Business, Enterprise and Employment Bill, the Government are going to abolish creditors’ meetings, which is the one point at which creditors can negotiate over those. Perhaps that might have been a better way of helping creditors achieve a better fee rate.
The only other point to make is this. I refer to the noble and learned Lord’s own profession of the law. As with doctors and accountants, everyone does general training before moving on to specialise. This is an important and fundamental way of understanding the environment, and it is strange to separate one profession away from it. I do not think that the barrier to entry should be lowered, which is what I fear this will be. As I say, the Government have failed to listen to those who know this industry, and they are clearly not going to change their mind tonight. On that basis, I beg leave to withdraw the amendment.
Deregulation Bill
Baroness Hayter of Kentish Town Excerpts(10 years ago)
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Baroness Hayter of Kentish Town (Lab)
My Lords, I move Amendment 12 but also give notice that I will oppose the Question that Clause 18 stand part of the Bill. I hope that the Government will accept, as a minimum, Amendment 12, even if they cannot accept the bigger—and in my view better—alternative, which is to drop the clause altogether.
The Government have come up with the rather strange idea of partial authorisation for insolvency practitioners. This would split in two the regulation of what is quite a tiny profession—fewer than 2,000 people. You would then have a profession for company insolvencies and a different one for individual insolvencies. On the basis of no evidence whatever, the Government have decided, in effect, to dumb down the specialist profession of insolvency practitioners. By doing so, they risk helping the larger insolvency firms at the expense of smaller companies, over 80% of which do not believe that they would get much benefit from lower training costs. Indeed, 90% said that they would not train a partial licence holder. The Government admitted to R3, which is the professional organisation involved, that the clause was not being introduced to fix a problem and they have cited no evidence of any undercapacity in the market or any evidence of complaints about the current system. The Joint Committee on the draft Bill, which was ably chaired by the noble Lord, Lord Rooker, was worried about the lack of stakeholder consultation on the issue. Subsequent discussions with the industry have not alleviated any of its concerns.
Clause 18 would allow insolvency practitioners to undertake corporate bankruptcies, which will almost always affect the financial status of individuals involved, with absolutely no training or qualifications relevant to the needs of such individuals when they also face insolvency. Indeed, insolvency practitioners very often do not know at the outset of a case, particularly with micro-businesses, whether they are dealing with a corporate bankruptcy or with a personal insolvency, given the involvement of personal guarantees and the nature of the creditors. The clause would harm small firms, two-thirds of which do both corporate and personal insolvency, just when the Government’s small business strategy is meant to be helping small firms. They do not like this one. Furthermore, it would add enormous expense to the profession, as it would require the development, the delivery and the oversight of new and additional systems of exam qualification. This would be on the basis of the Government’s own estimate that there will be about only 100 such partial licences.
It is hard to imagine how the Government dreamt up this clause. There is no significant demand—we could not find any—for any change. The only suggestion ever to have been around has been for a personal insolvency-only regime, but never for a corporate-only insolvency regime. There is no evidence of there being a group of people who would just love to be IPs and who are dying to enter the market. Indeed, a number of firms are reducing their workforce and there is no evidence for the argument that we need more.
The Insolvency Lawyers’ Association has questioned the logic of operating this proposed two-tier, mixed system. Indeed, in a way, it would be a three-tier system because some insolvency practitioners would be licensed to do individual insolvency only, some would opt to do corporate insolvency only and some would qualify to do both. R3, the professional body, which knows rather a lot about insolvency, has serious concerns about this change. It considers that partial licences would have a negative impact on business and individuals seeking financial advice, as well as on the quality and competitiveness of the UK’s insolvency regime, which, as I am sure the Minister knows, is assessed by the World Bank as being one of the world’s best.
If we look across all the professions, be they doctors, lawyers or accountants, we see that they always start by getting their initial qualification through a broad training that crosses the whole area of their discipline and they then go on to specialise. The Government seem to want to carve insolvency practitioners out of this, making them jump directly to a specialism. Even worse, it could lower standards. Jenny Willott MP, speaking as a Minister in the other House, said that partial licences will reduce a little,
“the high bar on entry to the profession”.
That sounds to me like a dumbing-down.
We are talking about people’s futures—whether jobs are to be saved or a company liquidated, whether it can be sold off so that some of those jobs can be retained, whether individuals will be made bankrupt, whether creditors will get back money that they have already sent to the insolvent company, whether someone with unsupportable debts can be helped to find a way through or whether a company can be sold to someone else who can keep at least some of it running as an ongoing concern. These are big issues that affect people’s futures.
The clause is misguided; it is unnecessary; and it has been criticised by the profession and other stakeholders. The Government would do well just to withdraw it gracefully rather than be forced to do so. My guess is that the clause would never be commenced and that wiser heads would finally prevail. The provision may be in law but I doubt that it would ever be put into practice, so better perhaps to lift the threat now. I beg to move.
The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)
My Lords, I thank the noble Baroness, Lady Hayter, for moving her amendment and speaking to Clause 18. When I came into the Grand Committee—I think that it was during the debate on Amendment 10—I saw the Benches absolutely crowded and I thought, “I didn’t realise insolvency practitioners commanded such interest, not even on a Sunday”.
The noble Baroness made some important points, which I will certainly seek to address, although I think that I will disappoint her, because neither do I feel able to indicate that the Government will accept the amendment nor do they have an intention to withdraw the clause. As she pointed out, Clause 18 will amend the law by introducing a new regime for the partial authorisation of insolvency practitioners. In future, those wishing to become insolvency practitioners will be able to qualify in relation to personal insolvency cases only, in relation to corporate insolvency cases only or in relation to both, as is currently the case.
The effect of the noble Baroness’s amendment would be to allow insolvency practitioners to be partially authorised but only in relation to individual insolvency. As I will come on to when I discuss the clause itself, partial authorisation will remove barriers to entry for those who wish to specialise in just the one discipline. However, I make it very clear that it is not the Government’s intention to restrict this opportunity only to those who wish to deal with individual insolvency. We believe that there should be an opportunity to specialise in individual insolvency, in company insolvency or, and as things stand at the moment, in both. There is no compulsion here; it would be the choice of those wishing to pursue a career as an insolvency practitioner.
The insolvency body R3, to which the noble Baroness referred and which, I acknowledge, is opposed to partial authorisation, has told the Government that 27% of insolvency practitioners work in firms that specialise in corporate insolvency. This compares with 5% who work in firms that deal only with individual insolvency.
The noble Baroness said that take-up of the measure will be small and she asked why we should proceed with it. Existing insolvency practitioners who have gained authorisation for both personal and corporate matters want to continue to cover both areas, but that will not necessarily be the case for new entrants. The Government believe that partial authorisation will be attractive to a minority within the profession who, by focusing on a specific sector or on specific clients, will find that partial authorisation allows them to take appointments in the types of insolvencies that they deal with.
We believe that the changes proposed in Clause 18 will result in lower entry costs into the profession for those who seek partial authorisation and that they will, over time, increase competition and lower fees. That, in turn, can lead to improved returns to creditors in insolvencies. That was certainly my experience when I was a Member of Parliament dealing with companies and small businesses that were often at the receiving end when larger companies went into administration. Very often, it is small businesses that suffer the most when there is an insolvency. If we can improve returns to creditors, including many small businesses, that must surely be a good thing.
It is important to have highly skilled professionals. While we are talking about partial authorisation, company insolvency practitioners and those engaged in personal insolvency matters require a full authorisation. I cannot accept what the noble Baroness says about this being a dumbing-down. Those who pursue that one part of the profession will have a full qualification and therefore I cannot accept that this is about lowering standards. It is important to have highly skilled professionals. We must not forget that imposing unnecessary regulatory burdens on entry into a profession itself has a detrimental impact, particularly on the public, who pay for the services of such professionals.
The noble Baroness mentioned exams and seemed to think that there would be an increased cost. I suspect that if someone is aspiring to become an insolvency practitioner and there are fewer exams to take, there will be a lesser cost for that individual. With regard to exams, I make it clear that the Insolvency Act 1986 provides that the recognised professional bodies that authorise and regulate insolvency practitioners must have in place rules to ensure that insolvency practitioners meet acceptable requirements in relation to education, practical training and experience. A memorandum of understanding between the Secretary of State and the regulators that underpins the Insolvency Act requirements provides that applicants for authorisation must hold a pass in the Joint Insolvency Examination Board exams. I assure the Committee that officials will work with the profession to modify the current exam structure to ensure that partially authorised insolvency practitioners can demonstrate a broad knowledge of both disciplines. The exam structure will obviously have to change, but I cannot see that it is going to lead to the greatly increased costs that the noble Baroness indicated.
As I said, Clause 18 is not about lowering standards; it is about setting appropriate standards. We are asking: why should someone who deals with only personal bankruptcy and individual voluntary arrangements have to know about the finer details of corporate administrations, unless of course they choose to do so? If they do, then of course that choice will still be there. For those insolvency practitioners who at present choose to practise only in corporate or only in personal insolvency, the time and money spent studying an area in which they do not practise will add little or no value to the service that they offer their clients.
Lord Wallace of Tankerness
My Lords, I say first to the noble Lord, Lord Rooker, that I did not mention that the provision had started life under the previous Labour Government because I did not know that until he informed me of it. Of course, not everything that the previous Labour Government did was wrong, as I recall from going through the Lobbies at times in your Lordships’ House. I will take the point that the noble Lord makes and find out just who was behind that, if I might make that inquiry.
There were some specific questions asked and I will certainly respond in writing to those who have contributed to this debate. However, it is also important to make the point that existing insolvency practitioners are, by the very nature of their business and profession at the moment, people who are qualified in corporate and personal insolvency. I understand that my noble friend Lord De Mauley has in the past been an insolvency practitioner and he has indicated that these are two different specialisations. Clearly, however, the practitioners are duly qualified and may well question why everyone coming behind them should not go through the same route that they followed.
It may well be, as we believe, that aspiring insolvency practitioners have shown a desire for some partial authorisation. A survey of members of the Insolvency Practitioners Association showed that non-IP members were in favour of this. It would be wrong to go so far as to say that there is an element of protectionism here. However, one of my arguments is that we are looking at people who want to come into the profession—by their nature they are not already there, giving their views—and there are many benefits to allowing that specialisation.
Since I stood up, I have received a further response to the noble Lord, Lord Rooker. I understand that this clause is a development of a policy started under the previous Government. An earlier version of it was proposed for inclusion in a legislative reform order, although the measure was withdrawn and, in the event, the order did not proceed. I will not to try to decipher this note further in case I get it wrong—I will write to the noble Lord.
With regard to the question from my noble friend Lord Sharkey, on 23 January the Government, on the recommendation of the Joint Committee, launched further consultation on whether any changes were required to what is now Clause 18. Responses were considered and included representations from insolvency practitioners, creditor representatives and others. I am not sure whether the responses have been published or whether there is any intention to do so, but perhaps I could write further to my noble friend and give him a flavour of the responses before Report.
My point is that we are dealing with people who are looking to the future and may aspire to a career as an insolvency practitioner but who do not particularly want to take on the whole gamut of it, preferring to specialise in one form or the other.
Baroness Hayter of Kentish Town
My Lords, perhaps I should mention—though it is not an interest, being from so long ago—that I was a member of the Insolvency Practices Council, which oversaw insolvency practitioners. I was there as a consumer, not as a trade union member, of the noble collection of insolvency practitioners.
One of the strange things is that this is a deregulation Bill, but it is going to create a new system of exams, oversight and monitoring. That is somewhat odd in a deregulation Bill, but that is beside the point. The assertion is made that it will attract new entrants, without any evidence. The assertion is made that IP fees will be reduced, without any evidence. The assertion is made that training costs will be reduced. Actually, the main training provider, BPP, has to apply its overheads across the exams, so the cost per exam will go up even if you do two exams rather than three. These are assertions, not evidence.
When I was involved in this area—this may answer the question posed by the noble Lord, Lord Rooker, though not to me—there had been suggestions about a personal insolvency-only regime, never a corporate insolvency-only regime. The idea was that people working in debt management companies in particular might want a personal insolvency-only regime. However, despite the fact that I spoke on this at Second Reading and have had lots of lobbying and approaches from everyone else, none of the debt counselling people has approached me to support the idea of a single licence. There has been silence on that. However, it explains why the amendment would be to allow a personal-only insolvency regime. None the less, I remain worried about the idea of a corporate-only insolvency regime, whereby people dealing with corporates would have no training in personal insolvency. It is an issue that we may want the Government to reconsider, but for the moment I beg leave to withdraw.
Public Bodies Bill [HL]
Baroness Hayter of Kentish Town Excerpts(13 years, 7 months ago)
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Baroness Hayter of Kentish Town
My Lords, I start by paying tribute to the Minister, because this Bill has improved enormously since Second Reading. We have obviously lost Clause 11 and Schedule 7. I think that we might have achieved what my earlier amendments in Committee and on Report sought to achieve: namely, that in using these powers in the Bill the Minister should have regard to the purpose for which any bodies that are going to be abolished or changed were created in statute. I therefore very much welcome government Amendment 60A, which lays out that powers may be used only,
“if the Minister considers that the order serves the purpose of improving the exercise of public functions”.
However, perhaps there should be a couple more tweaks. Amendment 60AA, the first of the two amendments in my name, might appear to be about drafting, but its intention is to make it clear that the “public functions” that are to be improved should relate to the bodies that are going to be covered in those orders. That might be the case, but I seek a little more assurance about what is in the Bill, otherwise it is not clear; it could mean any “public functions” of a government or anything else. I think the purpose is meant to be the purpose of the bodies that are being merged or amended or whose funding is being changed.
Amendment 60C would require the Minister to have regard to,
“the aims and objectives of the body where these are specified in legislation”.
I have reiterated a number of times that I do not believe that every body must exist for all times in the same form. In the words of the legal draftsmen, I think it concerns “having regard to” rather than being an essential part of what the Government are doing. Will the Minister therefore confirm whether what I regard as the objective of “having regard to” really is covered by the words “public function”? I shall give a couple of illustrations, to which perhaps the Minister could respond. First, something of the overall purpose of a body—for example, the Marine Management Organisation—could, if it is not considered properly or given regard to, be undermined by a change in funding. The Minister will be pleased to know that I have no complaints about it being in Schedule 4, but unless my Amendment 60A is accepted it would seem to be quite legitimate for its funding to be taken over by, for example, an oil company that was intent on deep-water drilling, since the Minister would not be required to consider the wider objectives of that body. Provided there had been consultation, the Minister could do what he will without regard to the original purpose and objectives for which that body was created.
Secondly, Consumer Focus has statutory powers to demand information across all sectors of the economy. Is that a public function? If not, again there is nothing in the Bill to ensure that those statutory powers remain. Thirdly, a duty is placed on Consumer Focus to promote sustainable patterns of consumption, an area of growing importance given the Government’s targets on carbon reduction. Noble Lords will be well aware of the work done by Consumer Focus—for example, on smart metering and the Green Deal. Again, is that duty a public function? If not, it would need Amendment 60C to protect it. Fourthly, does the statutory duty of Passenger Focus to represent the interests of the travelling public count as a public function?
Finally, I am pleased that, after some hesitation, Ofcom has agreed to its communications consumer panel continuing until at least April 2012. However, the uncertainty that surrounded its future for many months, and the consequent risk of an advocacy gap for consumers, shows how important it is that during the passage of the Bill, but also when it becomes law, there should be no weakening of vital protections for consumers. I hope that the new formulation will ensure that there is never a lacuna between the ending of one body and the start-up of its functions elsewhere. Will the Minister give those assurances and consider, particularly on funding, whether certain things could be retained without having regard to the objectives set down in statute? I beg to move.
Lord Soley
My Lords, I will speak to Amendment 60A. I am a member of the Delegated Powers and Regulatory Reform Committee, which has given considerable thought to this. However, I speak for myself and not the committee—as is always the case, of course.
I remind the House that the committee’s 11th and 12th reports are in the Vote Office now. Paragraph 12 in the 11th report states:
“If these expansive powers are to be delegated by Parliament to Ministers, it is important that, as a minimum, the general purposes for which Parliament expects the powers to be used should be set out on the face of the Bill, and this is not currently the case. The Committee therefore concludes that, as they stand, clauses 1 to 5 remain inappropriate delegations of legislative power”.
Quite rightly, the Minister has indicated that that is what Amendment 60A seeks to address. I am sure that he has put his usual effort into it, because I agree very much with my noble friend Lady Hayter that the Minister has gone a long way to improving this Bill—not least with the sunset clause, as the Delegated Powers and Regulatory Reform Committee recommended, which is a very important move. Indeed, I suspect that if the Minister had control of this Bill from the beginning, it might not have been such a mess in the first place. He must take some credit for that. Whether that helps his career or not is another matter, but I am afraid I cannot handle everything from here.
The amendment still deals with the issues under which the Minister may make an order. It refers to these fascinating words:
“efficiency … effectiveness … economy, and … securing appropriate accountability to Ministers”.
I always wonder how courts cope with things like this. Presumably if a body, an organisation, or an individual for that matter, chose to challenge a decision, it would first have to show that it was focusing on one of these issues. Then, if the court were asked to adjudicate, it would have to adjudicate on that basis.
This is where we come to the second issue. In its 12th report—the latest one that came out the other day—the Delegated Powers and Regulatory Reform Committee says in paragraph 8:
“It is for the House to consider whether Amendment 60A provides an effective indication of the purposes for which Parliament will expect Ministers to use their very broad powers under clauses 1 to 5”.
I would like a little more from the Minister on that. I am not sure how anyone is to interpret the phrase:
“improving the exercise of public functions”,
and,
“efficiency … effectiveness … economy, and … securing appropriate accountability”,
without either giving up in the face of a stronger government position or challenging it in court. I do not think that I am not alone in having concerns over many years, and over many Governments, about this increasingly blurred area between what Parliament says and means and the courts having to interpret it, which gets harder by the day.
The phrase,
“improving the exercise of public functions”
could be used in almost any circumstance. You could put it into almost any Bill, stand by it and say, “This is what the Government have decided and we will now have the powers delegated to us to carry it out in the way we think fit”. We should remember that when we delegate powers in this way, we are handing very broad powers to Ministers, which was the issue that concerned the committee. I would also argue that these powers are not clearly defined, so I would like a little more explanation from the Government. Indeed, I wonder where the words,
“improving the exercise of public functions”,
came from. I have a sneaking suspicion that, having read the 11th report, the Minister or his staff decided that they had to come up with something better. Since there is nothing in the Bill, the best they could manage to come up with is this phrase. Again, it could appear in almost any Bill, but if we go down this road we will start producing Bills that will hand over even more power to the courts to interpret. It is a bit late in the day, but I wonder whether the House is really happy about Ministers having this much power delegated to them in increasingly difficult areas of definition.
The Chairman of Committees (Lord Brabazon of Tara)
The amendment before the House at the moment is Amendment 60AA in the name of the noble Baroness, Lady Hayter.
Baroness Hayter of Kentish Town
My Lords, I thank the Minister for his reply. Clearly we are not worried about what present Ministers will do to the funding of the MMO; it is what any future ones might do that we distrust. However, I am grateful for the assurances and explanations that the Minister has given. I beg leave to withdraw the amendment.
Public Bodies Bill [HL]
Baroness Hayter of Kentish Town Excerpts(13 years, 8 months ago)
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“( ) In considering whether to exercise the powers under subsection (1), the Minister must have regard to the aims, objectives or functions of the body where these are specified in legislation.”
Baroness Hayter of Kentish Town
My Lords, I wish to degroup Amendment 62 from this group. That will enable us to debate that amendment when we deal with Clause 8, which is where it more appropriately belongs. I regret that I have not had much time to do this; I told officials but it may not have got through to the Minister.
I welcome all of the changes made to the Bill but there remains a major absence of a fundamental element. That is the purpose of the bodies whose existence, structure, functions or funding are to be changed. This amendment is about adding to the matters to be considered when exercising any of the powers in the Bill that,
“the Minister must have regard to the aims, objectives or functions of the body where these are specified in legislation”.
Without such a requirement in the Bill, Ministers will have to consider only either accountability to Ministers or efficiency, effectiveness and economy. These are laudable aims but they miss the fundamental point that these bodies were set up by primary legislation and have statutory duties or powers. As the Bill stands at the moment, as long as consultation takes place, the Minister can do what he will, without having regard to the original purpose and objectives for which the body was created.
I do not maintain that all functions laid down in law, or all bodies, have to continue unchanged for all time. However, I do maintain that if this legislation is to be used as proposed—to alter what has been laid down in law—the Minister should have regard to the functions, duties and powers of each body where statute has defined these. Therefore, I should be grateful if the Minister could indicate whether the Government will be willing to accept this amendment now or when we come to Clause 8. I am absolutely confident that the intention was never to undermine the purpose of any of these organisations, but solely to make them work better for the ends that Parliament has determined. I beg to move.
Lord Hunt of Kings Heath
My Lords, I am very glad to support my noble friend in her endeavours in this regard. As the noble Lord, Lord Taylor, suggested, the Opposition have always made clear that we have no objection to the principal aim of this Bill. It is right that public bodies should be reviewed from time to time. The concern has always been about the draconian powers that were given to Ministers, particularly in the draft of the Bill that we debated in Committee. We are very pleased about the removal of Schedule 7 from the Bill, and about the acceptance of the amendment that was moved in Committee on the restriction of ministerial powers in Clause 16. That is a very welcome addition to the safeguards that are contained in the Bill.
We could, however, go a little further, as my noble friend suggests. She makes the very important point that the bodies that we are dealing with, and the responsibilities that they have been given, were determined by Parliament in primary legislation. In using the Bill as is intended—to abolish in some cases and merge in others—it seems right that, as my noble friend’s amendment suggests, Ministers should,
“have regard to the aims, objectives or functions of the body where these are specified in legislation”.
The powers that are given to Ministers are still considerable, albeit that welcome safeguards have been given. My noble friend’s amendment would be very helpful in providing yet another safeguard.
Baroness Hayter of Kentish Town
I thank my noble friend Lord Hunt and also the noble Lord, Lord Newton, for their support. I accept that there has been a lot of movement, particularly on the issues of independence and the limitations on ministerial powers. On the consumer landscape work that is being done, it will be the civil servants who draft the consultation and the responses to that and therefore guidance to them to have regard to functions will be very important. I will return to this matter when we debate Clause 8, which specifies what needs to be considered. In the mean time, I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town
My Lords, the effect of these two amendments would be to move Consumer Focus—the National Consumer Council, as it is probably better known to the House—from Schedule 1, in other words the list to be abolished, to Schedule 5, whereby its functions would be transferred elsewhere. It is clear from everything that the Government have said that they do not wish to abolish the role, functions and duties of Consumer Focus, nor, indeed, to lose its expertise and specialist market understanding. The plans as set out are to merge all these functions and duties under two independent charities, Citizens Advice and Citizens Advice Scotland, with perhaps some, I gather, going to the General Consumer Council for Northern Ireland.
The intended transfer of such functions therefore stands quite appropriately, as the Government envisage it, within the powers of Clause 5, which is the power to transfer functions. I see no reason for it to be within the powers of the Minister under Clause 1, which is the power to abolish. Indeed, given that Consumer Focus was set up by an Act of Parliament, with the full support of this House, as late as 2007, with its role, remit, powers and responsibilities well debated and agreed at that time, it would seem the most extraordinary use of the Clause 1 powers to abolish it without primary legislation. It is not, in the words of an earlier debate, a dead duck or anything like it.
That is not what had been planned, in so far as we have been told. Its statutory work on behalf of consumers, young people, old people and those in rural areas—the vulnerable throughout the United Kingdom—is projected to continue. Consumer Focus’s powers to seek market information and to represent users’ interests in the setting of prices, the taking up of complaints and of super-complaints on behalf of all consumers—all these, we understand, are destined to remain and simply to be transferred to Citizens Advice.
Your Lordships are well aware of the superb record of the National Consumer Council—the Minister was, of course, a prior chair—and, more recently, of Consumer Focus. We are all aware of the savings in energy bills that it has made for millions of consumers. We also know of its work in establishing ombudsman schemes and in improving markets to work better for consumers. It has statutory powers to demand information from across all sectors of the economy, particularly in relation to energy and postal services. It has a statutory duty to have a particular regard to the needs of the disabled, the elderly, the poor and vulnerable workers and to represent consumers across all four nations by having a presence there. All of these will, we assume, be retained. So unless there is more that we do not know of, surely it is much more appropriate for Consumer Focus to belong in Schedule 5, not in Schedule 1. On that basis, I beg to move the amendment.
Lord Borrie
My Lords, in the course of many debates on the Bill, the question has repeatedly been raised, “If such-and-such a body is abolished, what is going to replace it? Who will do the tasks that the abolished body has performed?”. That is a very significant question in regard to this amendment, appropriately put forward by my noble friend Lady Hayter, because although the Government have thrown out a few of what I might call titbits of information—that Citizens Advice and Citizens Advice Scotland will give a certain amount of advice and will be better resourced than they are at the moment, struggling though the Government are for resources on all sorts of matters—the Government have also indicated that, so far as enforcement of the law is concerned, where retailers or others have contravened legislation, the trading standards officers employed by local authorities are to do the job of helping the consumer.
Even if one accepts that to a degree and ignores the consumer work of the Office of Fair Trading—as noble Lords know, I have declared an interest as a past head, or director-general, of that body—there is still the huge problem that the National Consumer Council has over the years produced a great deal of research, many studies and publications which have informed the Government, informed the Office of Fair Trading and informed the Department for Business, Innovation and Skills, as it now is. What is the substitute for that going to be if the National Consumer Council is abolished?
This week I noticed, because I got a large envelope in my post, that in the closely related field of competition policy the Government have worked out what is going to happen—in, at the moment, 100-plus pages of information. At the moment it is a Green Paper, next it will be a White Paper and then there will be legislation. There is a great deal of detail on matters that we might come to shortly on Report. We are to have a merger of the Office of Fair Trading and the Competition Commission. They are to constitute a competition and markets authority, and a whole lot of the Government’s Green Paper is taken up with how that is to be governed, what the governance is, how it is to work, various matters relating to antitrust merger policy and so on.
That is the sort of consultation detail—admittedly, the Government have not yet had the results of that consultation—that we in this House and the other place should have been given before the Public Bodies Bill was put forward listing whole hosts of bodies to be abolished without any explanation about any of them, except for a few titbits, as I have called them, of responses in this House and elsewhere by government Ministers about their reasons. We in this House are still very uncertain, even at the Report stage of the Bill, about why some of these bodies are to be abolished or merged or to have their functions transferred according to various schedules. Thank goodness that the Government have given way on Schedule 7 and withdrawn it; at least we do not have that huge pending tray of bodies that could possibly be abolished. Still, there is great uncertainty and, if she does not mind my saying so, I am sure that my noble friend Lady Hayter will agree that although the Government have said some things about this, they still have to do a lot of homework on what is to replace the work of the National Consumer Council.
The work of that body has been splendid. The noble Baroness, Lady Wilcox, was a distinguished chairman. Another distinguished former chairman, the noble Baroness, Lady Oppenheim-Barnes, is sitting in her place. I am glad to say that the chairmen of the National Consumer Council, while always eminent and excellent people, were not necessarily Conservatives; Lord Young of Dartington, my noble friend Lord Whitty and others have been chairmen as well. A combination of political expertise and experience has been brought to bear on a body that has given advice over the years since it was set up in 1975, which is quite a long period now. Many Governments have benefited from that body. What is to replace it? Have the Government given a complete answer to that? I would be very glad if the Minister could say a little more on this amendment.
Baroness Wilcox
Indeed, and that is why the consultation has been in-depth, why it is continuing now and why the chief executives of the organisations are coming together to make sure that this changes over and happens well. These and other issues, such as whether and how statutory powers are transferred to the Citizens Advice service and what delivery models might be appropriate in Scotland and Wales, will be formally consulted on after the elections in May.
The intention of the Government in making these proposals is to provide the best possible service for consumers, to be their champion at a national and international level, and to provide information and advice in ways that suit them best. I therefore hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Hayter of Kentish Town
I first thank my noble friends Lord Borrie, Lord Whitty, Lord Beecham and Lord Stevenson, and the noble Baroness, Lady Oppenheim-Barnes. As a former chair and Consumer Minister, she well understands the work of the organisation, as was indicated. I bow to her judgment. I agree strongly with my noble friend Lord Borrie that the whole move is still unsatisfactory. However, the point of this amendment is to help, rather than take on the whole of that issue. It is meant to help the Government by moving the NCC to Schedule 5, thereby increasing the flexibility that is open to them as they review the consumer environment.
As her own department is now finding out, and as my noble friend Lord Beecham has said, the CABs are already overwhelmed. My noble friend Lord Hunt said that in Birmingham all five are at risk, and there is to be a 20 per cent cut in Newcastle. All their energies will be put into what they do well at the moment. Advising individuals is simply not the same job as providing cross-market advice on how markets work for consumers. Someone yesterday said to me, “I like Citizens Advice. They are just like our local post office”. As the Minister said, Citizens Advice is indeed trusted, local and it knows you. However, combining it with Consumer Focus is rather like putting the post office together with a merchant bank such as Goldman Sachs. Just because they both do the same thing—handle money—you do not merge them. Just because Consumer Focus and Citizens Advice are interested in consumers, you do not merge them.
However, that is not in the proposal in front of us. I had expected the review of the consumer landscape to be revealed. I am grateful for the information, although not the content, which we will not now receive until after 5 May. However, the Government, in advance of announcing their consultation, already wanted to put Consumer Focus into the abolition bucket. That undermines and misunderstands the work of Consumer Focus, which is about consumer input into consumer policy. As my noble friend Lord Whitty said, we risk the loss of the statutory powers if Citizens Advice is unable to take on those powers, and if Consumer Focus remains in Schedule 1. That is a big risk. As my noble friend Lord Stevenson said, we risk losing advocacy and representation.
The role of Citizens Advice is face-to-face. It is about individual consumers. It is not about national policy or taking on British Airways, Virgin, internet providers or big national organisations that can also treat consumers poorly. Although I welcome the reference to international and European consumer policy, that is quite different from representing individuals in need—over money, housing or family problems.
We are talking about a transfer of functions that were laid down in the 2007 Act. I fear that the Government want to abolish those functions; otherwise, why are they putting Consumer Focus in the abolition bucket? I have heard the words of the Minister, but there is an overwhelming case for not abolishing Consumer Focus, but for putting it into Schedule 5, under which some functions could be transferred if the review shows that that is the best way forward. I should like to test the opinion of the House.
Public Bodies Bill [HL]
Baroness Hayter of Kentish Town Excerpts(13 years, 8 months ago)
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Lord Dubs
My Lords, the amendments in this group are to do with the Competition Commission and the Office of Fair Trading. These are among the most significant bodies covered in this particular Bill. They are fundamental to both competition policy and to consumer protection.
In passing, perhaps I may say that I regret that the BSkyB matter was not referred to the Competition Commission, but I appreciate that the topic is not one covered directly by this Bill.
I understand the Government want to merge most of the functions of the Competition Commission and the OFT, leaving some to go elsewhere. Clearly, these are matters of enormous concern but I am quite sympathetic to the idea of merging the two bodies. I have always felt there was surplus capacity in the two bodies, and they were not as sharply focused as they might have been in that one referred issues to the other.
It would be interesting to know, however, which of the functions of the two bodies will not be part of the new body. In other words, some of them are going elsewhere. I understand Trading Standards will have to take on some of the responsibilities. It would be useful to know what is in the Government’s mind as regards what the new Competition Commission will consist of, and what functions will go elsewhere and why.
This not an occasion on which to go into the details of how the Competition Commission—or, indeed, the OFT—operates, but it is complicated, because the Competition Commission takes references from other bodies, such as the OFT and sectoral regulators. It takes appeals against decisions by sectoral regulators, and matters of public concern may be referred to it by the Minister. So it is a complicated issue and I would like to know what will be the basis for references to the new Competition Commission. Will they be similar to the old ones? They cannot all be the same because the OFT itself refers issues to the Competition Commission. Can the Minister throw more light on that?
Even if we are to go down the path of merging the two bodies, surely significant lessons must have been learnt from how they operate. We can do things better, a bit differently and more economically, and we should take experience to heart. I think that the Government are going to consult on this, and I would very much like to know the nature of the consultation, how full it will be, how long it will take and what opportunity there will be to make full representations to the Government on what they have in mind.
Having said that, the Competition Commission and the OFT were, I understand, both set up by primary legislation and subject to extensive debate in both Houses. They are significant bodies. I wonder what it is about them that makes them susceptible to the rather truncated procedure under the Bill. I know that that argument has been used about other bodies in the various schedules, but surely it applies with enormous force in the case of the Competition Commission and the OFT. Parliament—I am sure, most Members of this House—would like an opportunity to debate that in full and to be able to move amendments on the proposed new body: to consider the implications, for example, of transferring some functions to local authority trading standards authorities, when they are under severe financial pressure because of the cuts. What will be left of trading standards authorities after the cuts have taken place in local authorities? Will there be sufficient to take on the functions that have come from these two bodies into a local area?
This is an unhappy way to proceed. Even if everybody agrees that the two bodies should be merged—and I would guess that a lot of people would—there is still a need to consider how it will work out in detail. I am unhappy that we are doing something so significant on what is, more or less, the back of an envelope. I beg to move.
Baroness Hayter of Kentish Town
I will raise a couple of issues on the consumer aspects—although there may be no other issues, as that is the purpose of these two bodies. I have three questions on which I seek information from the Minister. First, in transferring enforcement of consumer law to local trading standards bodies, how can trading standards enforce significant breaches of consumer law at national level, such as bank charges or airline practices? My second question regards supercomplaints. Is the Minister satisfied that taking supercomplaints about competition direct to the new merged body—without, therefore, the two-stage process of checking on a case—has been carefully considered before the merger was proposed?
My third question is in respect of those supercomplaints which deal with consumer detriment which arises from particular features of a market. I have in mind for example, the current supercomplaint by Which? on payment method surcharging. It is not clear to me where those sorts of supercomplaints, which come under general consumer protection regulations rather than breaches of law on competition, would be taken under the new architecture.
Lord Young of Norwood Green
I have sympathy with the amendment; I think that it is a probing amendment. I certainly welcome the framework document, because I think that it is an attempt to explain what is going on, even if it does not deal with every detail.
The Government state in that document that the challenge in creating a single competition authority will be to help create a framework which is genuinely greater than the sum of its parts—for example, by streamlining procedures and processes to the benefit of those who use or are affected by them. There is doubt about whether that can be achieved. My noble friend Lord Dubs was right when he said that both authorities when they were initiated were the subject of large debate and primary legislation. Is this the right way to deal with them in future? That is a major decision.
I certainly concur with some of the concerns expressed by my noble friend Lady Hayter. Indeed, I was going to ask about the consumer functions that are being transferred. The Government state that the focus is to create a single strong point of information on education and advocacy and that citizens advice services will also take on responsibility for the Consumer Direct helpline. Strong concern has been expressed in the Chamber about the idea that Consumer Focus will be merged with the citizens advice bureaux—mainly because there have been examples around the country of local authorities cutting those services. There is genuine concern about that aspect of the Office of Fair Trading’s activities being transferred to the citizens advice bureaux.
The document also mentions consumer credit functions being subject to a separate consultation as part of the HMT proposals for a new consumer protection and markets authority and that any subsequent transfer will be dealt with primarily through separate financial services legislation. It also talks about the possibility of the consumer functions being transferred in advance of the wider merger proposal. That only stresses our anxiety about whether there will be the ability at local authority level to deal with those aspects of consumer protection.
Those are our concerns about the proposals. I hope that the Minister will tackle the questions raised in his response.